The following discussion and analysis of the Company's financial condition and
results of operations should be read in conjunction with the consolidated
financial statements and related notes thereto included in Item 1 "Financial
Statements" in this Quarterly Report on Form 10-Q. This discussion contains
forward-looking statements that involve risks and uncertainties. The Company's
actual results could differ materially from those discussed below. Factors that
could cause or contribute to such differences include, but are not limited to,
those identified below and those discussed in the section titled "Risk Factors"
included elsewhere in this Quarterly Report on Form 10-Q.
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Overview
Friendable, Inc., a Nevada corporation (the "Company"), was incorporated in the
State of Nevada
About Friendable Inc.
Friendable Inc. is a mobile technology and marketing company focused on
developing and identifying products, services and brand opportunities with mass
market potential and scalability.
Friendable published its first mobile application in the Apple App Store and
Google Play Store in 2014 in the social networking and dating category. The
Friendable app achieved over 1.5 million downloads, top 10 worldwide rankings,
and has led to celebrity-related marketing opportunities and various
relationships with well-known music artists as well as up-and-coming independent
artists.
On June 28, 2017, the Company formed a wholly owned Nevada subsidiary called Fan
Pass, Inc.
Friendable has since pivoted its business focus to its Music Artist Offering, a
one of a kind 360 artist platform. The offering now includes music
production/collaboration, music distribution (Spotify, Sound Cloud), Play
Listing, Livestream/live events, promotions, ticket sales, behind the scenes,
merchandising designs/store/ship, tips, fan interaction, subscription offerings
and more, which all equal revenue sharing and earning for all music artists. It
is the Company's goal to become the new launch point for Indie Artists, as well
as Artists at all levels, as they build engagement, revenue, and fans/followers.
The Fan Pass livestream artist platform was launched July 24, 2020. The platform
has proven invaluable for artists and fans alike as performances shifted from
the stage to the "digital screen". The Company has grown its product and
services offerings to include a 360 suite of music artist services, completing
this full spectrum solution with its acquisition of Artist Republik and
FeaturedX in January 2022.
Friendable was founded by brothers Robert A. Rositano Jr. and Dean Rositano, who
have more than 27 years of experience working together on technology-related
ventures.
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For more information, visit www.Friendable.com www.FanPassLive.com
www.artistrepublik.com/ and www.featuredx.com/
Additionally, Download the Fan Pass app on the Apple App Store or the Google
Play Store.
Audiences can visit the website at www.fanpasslive.com or download the mobile
app from the Apple App or Google Play stores. Fan Pass offers a seven-day free
trial, which provides a VIP all-access pass. After seven days, this free trial
converts to a fee-based subscription of $2.99 per month, of which artists also
receive up to 40% as revenue sharing on a recurring monthly basis.
What precisely does Fan Pass Live do?
For starters, Fan Pass breaks down the barrier between artists and fans, with
artists broadcasting their events, concerts, and announcements to supporters
directly from the Fan Pass mobile application or desktop. More importantly, it
gives back to artists a way to remain relevant to their fan base and earn
revenue, launch their careers without the debt and ownership created by
cumbersome record labels and ultimately provides all the products, services, and
support to develop revenues, brand, fan base, music distribution and
production/collaboration for artists at any level of their career as well.
Fan Pass Live offers artists at all levels and genres, the opportunity to engage
fans from one location, removing the need for multiple sharing platforms. It
conveniently provides Exclusive Artist "Channels" jam-packed with all their
relevant content from videos, photos, interviews, and past and upcoming events.
While Fan Pass charges the fans a small transaction fee for ticket sales,
artists keep the money earned from ticket sales. The handling of merchandise is
also taken care of by the company and once it's approved by the artist, all
merchandising is released within the artist's Channel.
For artists there are tools available to help them "up their game" such as the
creation of custom logos and merchandising, live chat options, promotional aids
that provide the ability to live stream, post photos, audio, and video with
ease. For subscribers, fans can browse for upcoming events, shop merchandising,
search by music genre and create dashboards. They can also view notifications,
discussions, and their favorite music artists in one app.
While it's free for the artists to join, Fan Pass monetizes its business model
by using an "ALL ACCESS VIP" Offering. Commencing with the release of Fan Pass
v2.0 on July 24, 2021, this offering is priced at a $2.99 monthly subscription
($25.99 annual subscription), paid by fans through its website, Apple App Store
or Google Play Stores, with a three-day free trial. Fan Pass also offers an
"Artist Pro" monthly subscription of $8.99 which offers the "ALL ACCESS VIP",
plus advanced dashboard analytics, merchandising store access and promotion of
scheduled music events, On August 5, 2021, the Company announced the approval of
the Fan Pass v2.0 livestream artist platform by both the Apple App and Google
Play Stores. The mobile applications can be downloaded by users worldwide, and
Fan Pass v2.0 is also accessible via desktop and web applications.
How sweet does it get for the artists? These revenues are proportionately shared
with all Channel artists according to fan views and downloads. In exchange for
its platform features, live streaming tools, bandwidth, processing, and
handling, Fan Pass also earns platform fees on each separately ticketed event,
as well as splits with each artist on subscriber fees and merchandise designed
and sold on the platform. Fan Pass v2.0 contains all new UI/UX user interface
attributes, updated feature sets for artists and fan, as well as an accelerated
onboarding process for artists and artists' content, and enhanced dashboard
features.
The Company aims to establish Fan Pass as its premier brand and mobile platform
that is dedicated to connecting and engaging users from anywhere around the
World.
On January 4, 2022, the Company completed its acquisition of substantially all
the assets of Artist Republik, Inc. ("Artist Republik"). Artist Republik is a
subscription service specifically created for music artists to obtain music
distribution on certain digital platforms (such as Spotify and Apple Music) and
receipt of royalties from those platforms, together with providing a marketplace
to purchase beats, obtain enhanced audio production and purchase access to
playlists. Its decentralized platform allows independent music artists from
around the world to take control of their own careers through networking,
centralized resources, and AI-based management tools. Artist Republik has
attracted approximately 100,000 artists to its offerings and has operating
revenues from the sales of services. The Company acquired all of Artist
Republik's customer lists, customers, back-end processes, name, trademarks,
internet domains and other things necessary to carry on the business of Artist
Republik.
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In January, 2022 we also launched and released FeaturedX.com, a web property
acquired as part of the Company's acquisition of Artist Republik, FeaturedX has
thousands of artists currently available and is a place where artists can book a
guest feature, co-write, MIDI composition or live instrumental tracking for
artists releasing their next single or looking to extend reach and exposure by
tapping into these available resources for music production and collaboration.
While continuing to deliver a variety of expanded services to our artists,
platforms, and offerings, FeaturedX has now taken center stage as our next
service offering ready for growth. Working closely with Mr. O'Leary and Mr.
Menig, the 2 original co-founders of Featured X, it was immediately clear that
having them both on board as partners for our journey forward would be one of
our keys to success. This said, we have been able to reach agreement with both
O'Leary and Menig to join our team as partners as we focus on revenue, artists,
and additional services growth on a platform that already has great momentum.
Ryan "Tuck" O'Leary is a co-founder of FeaturedX and best known for slinging his
bass around with "Texas Metal" powerhouse Fit For A King, and has added another
ace to his ever-growing deck. In August 2020 alongside his longtime friend Jeff
Menig, O'Leary launched a new connective platform for creatives. FeaturedX is
the first premier platform for connecting and working with your favorite artists
from a multitude of genres. This is a dream team of the greatest artists in
alternative music. Combining years of friendships and touring experience we
built this as a community. Now teaming up with Fan Pass Live, FeaturedX is
looking to continue expanding and growing an already stellar roster of
creatives. Jeff Menig is a co-founder of FeaturedX and an entertainment industry
professional with over 21 years of experience in band management, live events,
merchandise, consulting, artist development, and marketing. His unrelentingly
passionate and persistent entrepreneur makes precision focused usage of the
diverse set of skills he's developed. Menig builds brands and bands for the
social media age, optimizing the multiple opportunities for engagement,
communication, and personal interaction for his clients. His keen attention to
detail, from visual elements to messaging, makes him invaluable as he teams with
Fan Pass Live to grow the FeaturedX brand and services.
For a complete and up to date presentation of the entire 360 platform, brands,
products and services offered by the Company please use the following link to
view the Company's 360 Capabilities Deck & Presentation or visit the investors
tab on the Company's website, which will lead to the Friendable, Inc. Investor
Relations or friendable.com/ir where the presentation can also be located. LINK
"360 Capabilities Deck & 2022 Presentation"
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Executive Leadership
Our two founders are a team of Entrepreneurs who have over 25 years of tech
related startup experience, recruiting talent, building teams and turning ideas
into big business opportunities, as well as exits for investors. Together
raising over $40M in capital, spanning various companies, with a history dating
back to the first ever Internet IPO (Netcom Online Communications - 1993), as
well as the development of the first ever World Wide Web Directory (sold to
McMillan Publishing 1995) and even deploying a first mover social network by the
name of nettaxi.com - 1998 - 2002, which was prior to Facebook and resulted in a
top 10 most trafficked web site in the World, with a market cap of approximately
$700M upon exiting the public company. Relationships developed over the years
include such companies as Apple, eBay and AT&T, as well as joint ventures with
Music Industry Giants, including Nocturne Productions, Herbie Herbert (Manager
of the Band Journey) and Music.com; an early adopter offering digital music
downloads.
32
Results of Operations
For the Three Months Ended
March 31,
2022 2021
REVENUES
Music royalties and services $ 64,040 $ -
Subscription and merchandising sales 1,216 1,305
65,256 1,305
OPERATING EXPENSES:
Commissions 3,542 159
General and administrative 384,521 380,685
Software development, hosting and support
related party 180,000 105,000
Other software and support fees 13,814 -
Revenue shares 49,042 861
Investor relations 3,587 18,716
Amortization of intangible assets 14,956 -
Advertising, promotion and marketing 134,854 55,633-
783,956 561,054
LOSS FROM OPERATIONS (718,700 ) (559.749 )
OTHER INCOME (EXPENSE):
Accretion and interest expense (70,204 ) (266,372 )
Loss on initial derivative expense - (1,796,835 )
Gain on extinguishment of convertible note 81,707 -
Gain(loss) on change in fair value of
derivatives (1,000 ) 138,000
10,503 (1,925,207 )
NET LOSS $ (708,197 ) $ (2,484,956 )For the three months ended March 31, 2022 compared to March 31, 2021
Revenues
The Company had revenues of $65,256 and $1,305 for the three months ended March
31, 2022 and 2021 respectively. Revenues in 2022 related primarily to music
royalties and service fees derived from the Artist Republik business acquired
January 5, 2022 and secondarily to subscription fees from Artist Republik $313
and subscription and merchandising sales from Fan Pass $903.(2021 Fan Pass
$1,305).
Operating Expenses
The Company had operating expenses of $783,956 and $561,054 for the three
months ended March 31, 2022 and 2021 respectively. The increase in operating
expenses in 2022 was due primarily to higher costs associated with the Artist
Republik business, with increased software, hosting and related support expense,
coupled with increased artists' share expense on the music royalty and services
revenue.
In addition, former employees of Artist Republik Inc. were retained on a
temporary basis during the transition of the Artist Republik business to the
Company. The Company also had advertising, promotion and marketing expense of
$134,854 and $55,633 for the three months ended March 31, 2022 and 2021
respectively to increase awareness through social media platforms to the
increased menu of music services now available to music artists.
Other Income and Expense
The Company had other net income of $10,503 for the three months ended March 31,
2022, compared to other expense of $1,925,207 for the three months ended March
31, 2021 which included a loss on initial derivative of $1,796,835.
33
Net Loss
The Company had a net loss of $708,197 for the three months ended March 31,
2022, compared to a net loss of $2,484,956 for the three months ended March 31,
2021. The decrease in net loss was due primarily to the loss on initial
derivative expense of $1,796,835. in 2021 described above.
Liquidity and Capital Resources
Working Capital
March 30, 2022 December 31, 2021
(unaudited)
Current Assets $ 80,579 $ 253,523
Current Liabilities $ 5,215,886 $ 5,007,005
Working Capital (Deficiency) $ (5,135,307 ) $ (4,753,482 )Current assets at March 31, 2022 decreased compared to December 31, 2021
primarily due to lower cash.
Current liabilities at March 31, 2022 increased compared to December 31, 2021
primarily due to a contingent purchase consideration of $410,000 relating to the
acquisition of the Artist Republik business in 2022, partially offset by a
reduction of $ 209,883 in 2022 in the Company's mandatorily redeemable Series C
convertible preferred stock liability.
Cash Flows
Nine months Three months
Ended Ended
March 31, 2022 March 31, 2021Net Cash Used in Operating Activities $ (474,561 ) $ (486,299 )
Net Cash Provided by Investing Activities
9,500 -
Net Cash Provided by Financing Activities 289,950 627,850
Net Increase (Decrease) in Cash $ (175,111 ) $ 141,551Net Cash Used in Operating Activities
Our cash used in operating activities was $474,561 for the three month period
ended March 31, 2022 compared to $486,299 for the three month period ended March
31, 2021. Net loss was $708,197 and $2,484,956 for the three month periods
ending March 31, 2022 and 2021 respectively. In 2022, adjustments to reconcile
the net loss to net cash used primarily included stock option expense $24,436 ,
amortization of debt discount $19,315, amortization of intangible assets of
$14,596, and premium, accretion and dividends on Series C preferred stock
$38,010. In 2021, adjustments to reconcile the net loss to net cash used
included an adjustment for initial derivative expense $1,796,835. In 2022,
changes in operating assets and liabilities included an increase in amount due
to related party of $20,000 and an increase to accounts payable and accrued
expenses of $ 198,368 . In 2021 changes in operating assets and liabilities
included an increase to accounts payable and accrued expenses of $138,056 offset
by a reduction in amount due to related party $115,000.
Net Cash Provided by Investing Activities
For the three months ending March 31, 2022 we received cash of $9,500 from the
business combination of Artist Republik.
Net Cash Provided by Financing Activities
Our cash provided by financing activities of $289,950 for the three month period
ended March 31, 2022 included the issuance of Series D preferred stock under
Regulation A of $246,200 less finder's fees of $10,000, and net proceeds from
the issuance of Series C preferred stock of $ 53,750. Our cash provided by
financing activities of $627,850 for the three month period ended March 31, 2021
included the issuance of Series C preferred stock sold for cash of $269,350 and
net proceeds from the issuance of convertible notes of $358,500.
The Company derives the majority of its financing by issuing Series C and Series
D preferred stock to investors. The investors have the right to convert Series C
preferred stock into common shares of the Company after the requisite Rule 144
waiting period. Series D preferred stock however can be immediately converted to
common shares pursuant to the terms of the Company' Regulation A offering.
Conversion generally calls for the common shares to be issued at a deep discount
ranging from 37% to 50% to the market price at the time of conversion.
34
Going Concern
The accompanying unaudited consolidated financial statements have been prepared
assuming the Company will continue as a going concern, which implies that the
Company would continue to realize its assets and discharge its liabilities in
the normal course of business. As of March 31, 2022, the Company has a working
capital deficiency of $5,135,307, has an accumulated deficit of $40,506,622 and
has a stockholder's deficit of $4,112,253 and its operations continue to be
funded primarily from sales of its stock. During the three months ended March
31, 2022 the Company had a net loss and net cash used in operations of $708,197
and $474,561. These factors raise substantial doubt about the Company's ability
to continue as a going concern for a period of twelve months from the issuance
of this report. The ability of the Company to continue as a going concern is
dependent on the Company's ability to obtain the necessary financing through
short term loans and the issuance of convertible notes and equity instruments.
The unaudited consolidated financial statements do not include any adjustments
to the recoverability and classification of recorded asset amounts and
classification of liabilities that might be necessary should the Company be
unable to continue as a going concern.
Management plans to continue raising financing through equity sales of Series C
and Series D Preferred stock, while intending to reduce and/or eliminate its
convertible debt. No assurance can be given that any such additional financing
will be available, or that it can be obtained on terms acceptable to the Company
and its stockholders.
Off-Balance Sheet Arrangements
As of March 31, 2022, the Company had no off-balance sheet arrangements.
© Edgar Online, source Glimpses
FRIENDABLE, INC. 
